Modernization of Management in Socialist China：
Impacts of a State-Led Japanese Management Boom in the 1980s
Yun Wu
Ph.D. student at Graduate School of Economics
Kyoto University, Japan.
Abstract
This study focuses on a historical phenomenon in China that occurred in
the 1980s. A great many books and articles in introducing Japanese
Management techniques were published, and the best ways to implement
these principles were widely discussed. State-Owned Enterprises (SOEs)
also employed many of these practices which are referred to the study as the
“Japanese Management Boom”. This study will explore the state’s role in
modernizing management by examining the genesis of the Japanese
management boom as well as its impact upon China.
1. Introduction
Japanese management (Nihonteki Keiei) was dominated the world
management discourse in the 1970s and 1980s (OECD 1973; Dore 1973；
Pascale and Athos 1981; Ouchi 1981; Schonberger 1982; Morita 1986; Ohno,
1988). Late in the late 1970s, the People’s Republic of China (China) also
began to study and to learn from Japanese management. As we shall see in
later sections, the 1980s was the period of leaning from Japan. Numerous
books and articles were published to introduce Japanese Management.
1
Discussion of whether or not to use these principles and how to apply them
was widely argued in academia as well as in governmental sectors. Moreover,
in State-Owned Enterprises (SOEs), the Japanese management “know how”
was already practiced. The entire nation was enthusiastic about learning
from Japan and this phenomenon is called “Japanese management boom”.
The full impact of the rise and fall of Japanese management boom was
not fully felt until the beginning of the 21th century. On the one hand, China
has experienced remarkable achievement on management development,
which is believed to have led China to become a global manufacturing power.
Current Chinese management concepts and practices are incorporated with
various ideas absorbed from foreign countries. As per Wu’s finding on the
development of China’s management learning in the 1980s, “management
concepts were mainly adopted from the U.S., and the “floor-level” practices
mainly followed the Japanese way (Wu 2015a, 212).” On the other hand,
Japanese management today, has become a symbol of socialism in Chinese
eyes, and is gradually being avoided in management discussion and practices.
A reflection of this change can be seen from the decreasing popularity
Japanese companies among young Chinese job seekers. In the 1980s,
Japanese companies in China had pulled many talents from SOEs and
government sectors to work for them (Nihon Noritu Kyokai 1994, 431; Seki
1994, 21; JIL 1996, 322; Zhang Jixun 1993, 74). But by the initial period of
the 21st century, Japanese enterprises were no longer favored as an
employer (Wu, 2005).
What changed Chinese attitude towards Japanese management so
2
much? Literature on Japanese Multinational Corporation (MNC) in China
has provided various explanations as why Japanese management was
difficult there and why Japanese MNCs had problems in recruitment of
satisfied employees. One study considered that Japanese management
practice was developed in a specific culture setting which was suitable only
for Japan (Takai 2002). Another study compared enterprises from Japan, the
United States, and Europe who were operating in China, and concluded that
Japanese enterprises were less competitive in employment because of their
lower salary, seniority system, and delayed localization (Ma 2000, 157).
Moreover, an interview survey conducted by Nomura Research Institute in
2003 revealed some specific indications that Chinese “white collar”
employees had toward Japanese enterprises. It is interesting that these
interviewees thought Japanese enterprises are socialistic because “job
objectives are set equally, and they do not pay attention to individual
abilities. They value the team but there is no clear reward for personal
achievements” (Konomoto and Ye 2003, 33). These observations are more
concerned with the result of the change (the question of “why”) than with the
process (the question of “how”). How Japanese management changed from
the best model in the 1980s to a less honored one in China, is not yet
answered.
The author believes the answers are to be found in the institutional
purpose of the state in initiating the Japanese management boom. This
paper is not intended to assess whether the state was right or wrong in their
choice of Japanese management principles. Neither is it, concerned with
3
assessing the concepts and practices of Japanese management adopted by
China during the boom. Rather, it seeks to clarify how the Japanese model
was recognized as a legitimate developmental goal by Chinese policy makers,
and how it implicated the common understanding of Japanese management
in China.
This paper is structured as follows:
The first section traces the
background to the Japanese management boom and discusses it in the
context of the state’s “Four Modernizations” goal. The second section
observes the state’s promotion process with regard to management
modernization and explains how Japanese management became a desired
paradigm for China. The third section analyzes how Japanese management
in China earned a reputation of socialism and how it impacted Chinese
people’s recognition of that understanding. The fourth section is a general
discussion of the nature of Chinese management development, and concludes
that the fall of the Japanese management boom represents the collapse of
orthodox socialist shackles.
2. “Four Modernizations” and Management Modernization
In the late 1970s, after the death of Mao Zedong (1976), new leaders
emerged which included Hua Guofeng (state president), Deng Xiaoping
(vice-premier) and other senior members of Chinese communist party (CCP).
These men faced the great responsibility of feeding the burgeoning
population in the “poor and blank” condition. While Mao believed “poor and
blank” was a source of great moral purity and revolutionary energy, his
4
policies, such as the "Great Leap Forward" (1958-1960), the “Four Cleans
Movement” (1963-1966), and the "Great Proletarian Cultural Revolution"
(1966-1976) brought tremendous disasters to the nation. After these bitter
experiences, the new political leaders corrected Mao’s mistakes and
transferred the state’s central task from political struggle to economic
development.
In the opening speech at the 1st National Science Conference held On
March 18, 1978, Deng Xiaoping pushed forward a goal of “Four
Modernizations” (Agriculture, Industry, Science & Technology, and National
Defense). The “Four Modernizations” goal had been first conceived by Mao in
the 1950s, but it had never been put into practice. Deng inherited this goal
and developed it on a practical level. His opinion on how to accelerate the
modernization process was to “use all the world’s advanced technology and
achievements” (Deng 1983, 111). Even before the Cultural Revolution, Den
had been famous for stating, “It doesn’t matter whether a cat is white or
black, as long as it catches mice.” Deng stressed opening China to the outside
world, the implementation of one country, two systems, and the phrase “seek
truth from facts”, advocating for political and economic pragmatism. This
meant that China must open the door and take the advantage of foreign
experiences, including those of capitalist countries. Following the “Four
Modernizations” goal, China started a policy of “learn from foreign
countries”.
Although the goal was stated and the learning policy was in place, the
state did not have a coherent plan for directing what and how to learn.
5
Implementation of the new policy was difficult because China’s industry had
been virtually isolated from the West and Japan until the early 1980s. As C.
Carl Pegels (professor at the State University of New York) said, China “had
not been able to benefit from the managerial, engineering, technical, and
efficiency measures that had been commonplace in the developed countries
for many years” (Pegels 1987, 84). The previous experience of “learning from
Soviet” in the1950s, had paved a way for China’s industrialization base. This
was the basis of the new political leaders’ belief that technology was the
priority for the restructuring of the economy. Therefore, the state’s first
attempt at learning was focused on technology. A huge technology import
plan, called “Ten Year’s Outline for The Development of National Economy
1976-1985”, was implemented. It soon failed however, for China was in need
of a fiscal budget, and lacked the capabilities to manage those imported
projects. By the end of 1978, the state shifted the learning focus from
“foreign advanced technology” to “foreign advanced management”, and began
to seek the best management model for China (Wu 2015b, 307).
As part of the “Four Modernizations” goal, management modernization
began receiving increased attention. The term, “modernization management”
(Xiandaihua Guanli) became popular. It was introduced in various industries
and the common Chinese mantra in the 1980s was “the use of findings from
nature and social science to make the management adapt to the development
of modern science and technology and be in accord with the requirements of
modern large-scale production” (Zhongguo Meitan Gongye Qiye Guanli
Xiehui 1991, 72).
6
3. The State’s Choice and The Beginning of Japanese Management Boom
Towards management modernization, the state took the effort to
determine what constitutes “modern” and how to make it work for China. It
started with collecting and analyzing information about modern knowledge
and skills from developed capitalist countries. The United States, Japan, and
countries in Western Europe which were regarded to have successful
management experiences, were the target. In October 1978, the State
Council signed a mission to the State Economic Commission (SEC) to
organize overseas study tours. A management inspection delegation was
then formed and named “SEC management delegation.” This delegation
included elite officials and influential
scholars. Table 1 shows the major
composition of the delegation. Yuan Baohua, who served as head, was from
SEC and later became the most powerful official in charge of China’s
management policies. The counselor of the delegation, Deng Liqun, was a
member of Deng Xiaoping’s brain trust. He had a strong bent to the left
viewpoint of socialism. Sun Shangqing and Ma Hong were top economists
from Chinese Academy of Social Sciences (CASS).
Table 1. Major Member of SEC Management Delegation
Name
Post in Delegation
Post in Workplace
Yuan Baohua
head
deputy director, SEC
Deng Liqun
counselor
deputy dean, CASS
Xu Liangtu
deputy head
deputy director, SEC
Zhang Yanning
general secretary
director, Integration Dept of SEC
Sun Shangqing
member
deputy director, Economic
Research Institute, CASS
7
Ma Hong
member
director, Industrial Economy
Institute, CASS
Source: Tian 1999,1; Zhongguo Qiye Guanli Xiehui 1980, 40; Zhongguo
Qiye Guanli Xiehui 1981, 27.
With the task of learning what the modernization was, and how to make
the foreign advanced management experiences useful for China, the
delegation conducted three inspection tours, a Japan tour (October
31~December 5, 1978), a U.S. tour (November 5~December 6, 1979), and a
Western Europe (West Germany, Switzerland, Austria) tour (April 30~July 4,
1980). The delegation comprehensively inspected each country and came
back with many suggestions that China should learn or take for reference.
(For detailed information of delegation’s three inspection tours, see (Wu
2015a, 215-217)).
Not all suggestions were accepted by the State Council however. In fact,
the state filtered the suggestions and eliminated those which were not
considered to be in line with the foundations of a socialist institution. The
process of this choice depended, to a great extent, on institutional
arrangement at the time. As the guiding ideology of China’s socialist
construction, Marxism affected management understanding in Chinese
academia. Since Marx generalized management into a dual matter with
natural and social attributes, Chinese scholars and political leaders used
this theoretical framework when they discussed leaning issues. In terms of
the natural attributes of management, they believed management was a
kind of science which serves any system. In terms of the social attributes
however, they thought management also reflected relations of production.
8
And the difference of
production relations, they believed, was the
fundamental difference between socialism and capitalism. Therefore, the
discussion naturally concluded that China should learn management
practices which could endorse socialistic production relations.
Socialistic production relations however, had ridden a wave of reform
since the late 1970s. Inside the central government, as well as in academia,
disputes on where to go in economic system raged. Reformers held that
China should take the market mechanism into the economic system, while
the conservatives insisted that socialist economy should be a planned
economy. The dispute experienced 5 circles from 1978 to 1993 according to
Zhang Wei-wei’s opinion, and conservatives held the upper hand in the early
rounds (Zhang 1996). Influenced by the old ideological convention, the term
“market economy” had remained an ideologically sensitive phrase as it “had
been regarded in classic Marxism as the antithesis of socialism” (Zhang 1996,
p.59).
In April, 1981, the state officially rejected the idea of installing market
mechanism into the Chinese economic system. Any practice with the purpose
of weakening the function of planned economy was considered to be wrong.
This delimitated not only in the economic section, but also in management
learning as well, that China’s modernization practices should follow the rule
of a planned economic system.
In the matter of management selection, the state lied on reports from
the SEC management delegation. When the delegation reported its findings
to the central government, it stressed the market role in the U.S.
9
management model, but concluded Japanese management had more to do
with planned and social equity (Wu 2016). Therefore, the central government
opted to learn from Japan.
With the backing of the state, the Japanese management boom started.
Various learning activities were carried out. Many delegations and study
groups were sent to Japan. According to the records of “China Enterprise
Management Association” (CEMA), from 1979 to 1988, CEMA sent 19 groups
to Japan to learn. Also, it invited 43 management related groups and persons
to China to teach (Tian 1999). Table 2 provides some brief information on
how the teaching activities were conducted. For detailed information, see one
example below.
In March 1980, 6 Japanese specialists who had been sent by the “Japan
Productivity Center for Socio-Economic Development” (JPC-SED) stayed in Tianjin
for 16 days. They gave lectures to 161 management staffs of enterprises from 19
provinces, autonomous regions and municipalities directly under the central
government. After that, they visited 4 factories in Tianjin, analyzed the current
management condition of each factory, and gave them some advice for improvement.
(Tian 1999, 17)
The state also used the publications to promote Japanese management.
Table 3 and 4 show that Japanese management books and periodicals topped
the lists in the 1980s. Although further qualitative content analyses are
needed to accurately understand these publications, what can be said for
sure is that before the mid-1990s, studies and discussions on Japan
concentrated on using Japan’s experience for reference. In terms of content,
“the economy, industrial structure, corporate culture, role of the government,
etc. were emphasized as worth learning” (Gao 2000，94). In brief，Japan
10
was seen by China as an appropriate model, not only for the management of
industry and enterprises, but also to a broad application that included
economic development and public administration. Through these publication
resources, the Japanese management was popularized as a model of
modernization management.
Table 2.
Management Related Visitors from Japan (1979-1983)
MM/Year
Name of Visiting Group
06/1979
Visiting Group of Business
Management and
Technology
03/1980
First Top Management
group of JPC-SED
09/1980
08/1981
First Japan-China
Friendship visiting group
of JPC-SED
Second Top Management
group of JPC-SED
09/1981
Second Japan-China
Friendship visiting group
of JPC-SED
04/1982
Japan JPC-SED Visiting
Group
Japan International
Cooperation
Agency(JICA) Visiting
Group
Third Top Management
group of JPC-SED
Fourth Japan-China
Friendship Visiting group
of JPC-SED
JICA Visiting Group
11/1982
03/1983
09/1983
10/1983
Number/ names
15/Kaoru
Ishikawa(group
head)
28/Matakatsu
Nakagawa(group
head, vice president
of JPC-SED)
300/n.a.
Activities
Introduced the experience of
QC& industrial production
standardization.
n.a
35/ Matakatsu
Nakagawa(group
head)
350/ workers,
section leaders, firm
directors, managers
& specialists
n.a.
Introduced the Productivity
Movement in Japan.
4/ Takazo Naitou
etc.
Discussed setting up a
management training center in
Tianjin.
18/n.a.
Gave international management
lectures in Beijing.
Visited Shanghai, Tianjin etc.
350/n.a.
n.a.
Visited Shanghai and Tianjin.
Visited Shanghai, Beijing,
Tianjin.
n.a.
Attended the opening
ceremony of Tianjin Training
Center of Management
Source: Quote from Wu 2015a, 219.
11
Table 3. Book of Business Management Related to Japan, America and West
Europe in 1970s and 1980s.
Key
word
period
1970-1979
1980-1989
Business
management
& Japan
4
107
Source: Quote from Wu 2015a, 221.
Business
management
& America
3
60
Business
management
& Western (Europe)
0
8
Table 4. Articles on Enterprise Management and Industrial Economy in
Renda Fuyin Baokan Ziliao
Keyword in
Title
volume
Industrial Enterprise
Management
(1980-1990)
Industrial Economy
(1979-1990)
Japan
The U.S.
The West
191
93
50
159
63
13
Source: Quote from Wu 2016
4. Japanese Management and Socialism
How did the Japanese management propagated in China acquire a
socialist tinge? Firstly, it was considered a socialism-leaning model from the
start when it was chosen. As Wu mentioned, the state choose Japan over the
U.S. and West Germany as its learning model to strengthen the socialist
system (Wu 2016). The SEC management delegation reported to the central
government that Japanese management was “human centered”, which
would lead to “less strikes” and “less class conflicts” (Wu 2016).
Secondly, the Japanese management boom promoted the concept of
Japanese management socialization. Influenced by the state’s intention, the
boom developed with some special characteristics. For instance, in the
introduction and discussion of Japanese management, it emphasized
12
cooperation and common good, instead of detailed practices, as the essence of
Japanese management. These factors were what a socialist society desired.
Another example is seen in the many publications that supported the
opinion that China at the time was a copy of Japan in 1945~1950s. Economic
datum was very similar to that of Japan at the starting point of economic
take-off. Although its nature differed from China’s planned economy, the
planning guidance that Japanese government offered was regarded as a
referential experience for China. Moreover, Japan’s life-time employment
policy attracted great attention during the boom, and much literature
compared it with China’s “iron bowl” (employees never get a layoff). The
conclusion of the comparison should be summarized as follow. Employment
in both countries was guaranteed. They differed in that Japan used economic
incentives such as paying bonuses to employees to stimulate their motivation.
The hidden implications of this literature were many, but there was a
common message. China and Japan had many similarities in the social
system, and China could develop like Japan if China followed the Japanese
way.
These opinions originally came from the Japan tour report of the SEC
management delegation, and were widely accepted by later Japanese studies
in China. Thus, whenever talking about economic development and
management, Japan naturally became an object to be compared and
followed.
The attendants of the Japanese management boom were independent
entities such as SOEs,
governmental
cadres,
scholars,
journalists,
13
intellectuals. Their appeals were surely not the same. But this did not
change their common interest in serving socialistic construction, whether it
was under the planned economy or a market economy. Even in the opinion of
conservatives, Japanese management equaled “good working spirits” and
could bring “high ethical standards” (Deng 1979, 4).
For the reasons discussed above, the Japanese management brought a
misconception among Chinese people that Japanese management was
somewhat socialistic and was similar to the management system in SOEs.
This misconception can be verified in Ueki’s survey conducted in 1997, in
twelve Japanese enterprises operating in China. Middle managers from
Japan and China thought differently about Japanese management. While
most Japanese respondents (83%) regarded the management system in
Japanese Enterprises and SOEs as totally different, 93% of Chinese
respondents thought they were somewhat similar or highly similar (Table 5).
Table 5. Level of Similarity on Management System between SOEs and
Japanese Enterprises
Items
Middle Managers
From Japan
From China
Respondents
Respondents
Percentage
Percentage
Highly similar
1
3％
7
13％
Somewhat Similar
4
14％
42
80％
Totally Different
24
83％
4
7％
Total
29
53
100％
100％
Source: Ueki, Nihon Gata Keiei Gijyutsu No Kokusai Iten, 177.
14
5. Conclusion: Fall of the Japanese Management Boom and Its Meaning
To sum up, this paper has observed the genesis process and development
of the Japanese management boom in China. In this boom, the concept of
Japanese management was influenced and promoted by the state. The boom
was state-led in nature and was a part of China’s modernization goal. The
orthodox socialistic ideology of the 1980s limited the comprehensive
introduction of Japanese management and led to a misconception on it. This
partial understanding then was modified by Chinese society.
Things began to change in the early 1990s. On the one side, the state
still emphasized that China should learn management practices from Japan.
In 1993, Zhu Shaowen, chair of Japanese Market Economy Research Center
at Chinese Academy of Social Science stated the following:
Although Japanese management, corporatism (Kaisha Shugi) in particular, is
criticized now (since the bubble economy collapsed in early 1992),
China is still
going to put forth effort to learn from Japan. It is because China’s situation and
its development stage are different (from other developed countries). We are
learning the practices such as corporate ownership and its principles, Japanese
collectivism, competitive order between enterprises… It is very important for
China to learn seriously the Japanese enterprise management, and the
experiences of Japanese-style market economy, even though the experience might
be the unsuccessful one (Zhu 1993, 13).
On the other side, with the establishment of market economy in 1992
and the infiltration of its thought, people’s work ethic has been greatly
changed.
Socialist equality and collectivism are not considered compatible
with the market economic system. This ideological animosity toward the past
socialist system accordingly affected Japanese management, which was
considered the best model for socialist China in the 1980s. Therefore,
15
Japanese management lost former glory and became the target of criticism.
Even practices that did not relate much to the ideology issue got criticized.
For instance, in the 1980s, scholars highly valued the fact that Japanese
companies usually sent managers and technicians to their subsidiaries in
China (Xu 1991, 144). This kind of practice was later criticized however, as a
big barrier for Japanese companies’ localization (Konomoto and Ye 2003, 33;
Furuta, 2004; Seki, 2003).
The fall of the Japanese management boom revealed an estrangement
between the will of the state and the society. The beginning of the boom
represented the priority of socialist ideology, and its fall meant the collapse of
orthodox socialist shackles.
This paper also has important implications upon economic development,
although from a management perspective. By observing the Japanese
management boom, we may view the role of the state in economic reform.
China’s market transformation in the 1980s was argued by Coase and Wang
as a marginal revolution, which was carried out by the non-state sectors.
This paper supports their opinion that the market transformation was “not a
top-down” process, but an unexpected result (Coase and Wang, 2012).
16
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